The Cost of Litigation
posted by Daniel Solove
The NY Times has an interesting article about defamation law involving a lawsuit by a judge against a newspaper for libel. The article noted some interesting facts about the nature and cost of defamation litigation:
The [Medial Law Resource Center] said judges win at trial at about the same rate — 60 percent — as anyone else who takes a news organization to court. But of those that are appealed involving public officials, the media win about 68 percent of the time.
The reason, experts said, is that appellate courts tend to be less susceptible to emotional arguments than juries and more attuned to the legal standard of malice as it applies to public officials, including judges.
Still, during the last several years, the center said, the media have appealed a smaller percentage of cases. In the 1980s, news organizations appealed about 87 percent of the verdicts against them; since 2000, they have appealed 76 percent.
“The media tend to win, but it can be expensive to litigate because you aren’t vindicated until appeal,” Mr. Dodell said. He said that 60 percent to 80 percent of the dollars his company paid out went to defense expenses, not awards.
I am one who believes that the media should be responsible when it defames people or invades their privacy, but the last paragraph in the excerpt above is quite alarming. One of the primary problems with our legal system is its extravagent cost, and the problem is only getting worse. The problem is caused in large part by lawyers, who command extremely high hourly rates. Litigating a case is increasingly a big production, almost like producing a small movie.
One possible solution is eliminating the so-called “American rule” for litigation costs, which holds generally that each side bears its own costs. In other countries, the loser pays. Proponents of a loser pays rule argue that it will weed out frivolous lawsuits brought solely to intimidate defendants to settle rather than expend massive litigation costs. Critics of shifting to loser pays argue that such a rule would seriously deter many legitimate tort cases, as large organizations can run up litigation costs and make the risk-to-reward likelihood in a case too unfavorable for anybody to litigate. In other words, a loser pays rule might result in too few worthy cases being brought. In contrast, the American rule doesn’t overly discourage litigation, and it forces the parties to try to resolve the case themselves. But the incentive is to settle quickly regardless of who’s in the right because of the enormous potential litigation costs. Changing the American rule to loser pays still will not address the problem that we have an extremely overpriced dispute resolution system.
The great value of our legal system is that it allows people the opportunity to present their side of the story and to be heard. But that takes time and often a lot of attorney labor, which is why it is so expensive. I believe that at some point, our legal system must evolve to address the problem of cost, as the litigation process itself is becoming worse than losing the case. Is there a viable solution?